Factors affecting wage and salary administration

Question

What are the factors affecting wage and salary administration?

Answer 1

The term employee’s remuneration comprises together incomes and earnings. Wages are usually reflected as the price of labor which is provided to the employees for the services rendered to the organization employing them. Where substantial amenities rendered is difficult to calculate the expense is called salary. Normally, payment made to workers is referred to as wages, and remuneration paid periodically to persons whose output cannot be measured such as clerical, supervisory and managerial staff, is called salary. Wage and salary administration is affected by so many factors and most of them are uncontrollable in nature so probably, this decision is more crucial and critical. Major factors affecting wage and salary administration are discussed as under:

1) Demand and Supply

2) Organization’s Ability to Pay

3) Prevailing Market Rate or “Going Wage Rate”

4) Productivity

5) Cost of Living

6) Trade Union’s Bargaining Power

7) Job Requirements

8) Management Attitude

9) Psychological and Social Factors

10) Legislative Considerations